Walgreen pushes to keep Express Scripts clients

Walgreen CEO Greg Wasson said Friday chances are probably "slim to none" that the drugstore operator will reach an agreement with pharmacy benefits manager Express Scripts before their current contract ends Saturday.

Walgreen Co. announced that it is taking several steps to help patients covered by an Express Scripts pharmacy network to continue to use Walgreen locations after the agreement ends. It expects to continue working with more than 120 Express Scripts clients, which include employers and health plans.

Express Scripts Inc. pays Walgreen and other drugstore operators to fill prescriptions. The companies have said since June that they were preparing to stop business once their three-year contract ends this year. Walgreen has said it would rather give up the revenue it gets from Express Scripts, which is based in St. Louis than continue filling unprofitable prescriptions.

Walgreen, which is based in Deerfield, Ill., has said it expects about keep about 10 million of the prescriptions it fills for Express Scripts. It filled about 88 million prescriptions in fiscal 2011, so that would amount to a loss of almost 90 percent of the prescriptions.

The nation's largest drugstore chain said Friday it has a "patient transition plan" for Express Scripts members, as it tries to keep both businesses and individual customers. That includes increasing staffing at its call center and making computer system changes to help transfer multiple prescriptions at once. It also includes a discount during January on the membership fee for the Walgreens Prescription Savings Club.

Express Scripts had offered to extend contract negotiations into January, but the drugstore chain declined because patient prescriptions still would have been disrupted after the current agreement ended, Wasson said Friday.

"We had reached out with a substantial offer (earlier this month), and the purpose was frankly to just see if there was one last shot or opportunity to prevent the disruption that's going to happen in a couple days," the CEO said, adding that they didn't "get anything meaningful back."

Wasson said the pricing of different pharmacies within a pharmacy-benefits-manager network varies by only about 5 percent, so no real significant savings comes from removing Walgreen.

"I think the risk that Express Scripts has, frankly, as we work with the rest of market and form deeper relationships with the other PBMs and health plans out there is that we never come back to them," Wasson said.

Express Scripts spokesman Brian Henry said, however, the rates Walgreen charges to fill prescriptions are 20 percent higher than other pharmacies in its network, and the companies also disagreed over identifying generic drugs.

"We've been open to having them in the network at rates that are right for our clients," he said.

Walgreen said the break will hurt its sales and earnings during fiscal 2012. But it also expects to keep 97 to 99 percent of its fiscal 2011 prescription volume in the new fiscal year. The drugstore chain said more than 120 Express Scripts clients have either switched PBMs or taken other steps to maintain access to Walgreen pharmacies next year, and Wasson said he expects that total to grow.

But Henry said only two Express Scripts clients have dropped it and switched to another PBM due to the Walgreen deal ending, and four others are keeping Walgreen in their pharmacy network.

Walgreen fills one out of every five prescriptions in the U.S., and it filled about 819 million prescriptions in its last fiscal year. The company has about 7,800 stores.

Shares of Walgreen fell 24 cents to $33.19 in Friday afternoon trading and have fallen more than 26 percent since it said it would stop doing business with Express Scripts. Shares of that company climbed 47 cents to $44.81 Friday but have fallen 18 percent since June.